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CARE International’s programme in rural
Zimbabwe promotes access to basic
financial services combined with support
to farmers for accessing agricultural input
and output markets. Findings provide
evidence that Savings Groups enhance
the capacity of small-holder farmers to
purchase agricultural inputs. However,
the evidence is less clear that linking
Savings Groups to local agro-dealers
through the Agribusiness Entrepreneur
Network and Training (AGENT) Project
resulted in a direct increase in the
purchase of agricultural inputs.

Context Agriculture has been and remains
a fundamental part of Zimbabwe’s
economy; however, due to structural
changes in the sector, the economic
crisis of the past decade and recent
droughts, Zimbabwe’s agricultural sector
has declined precipitously and the
country is no longer food self-sufficient.
At the height of the economic crisis in
2008, large-scale input providers ceased
operation and many farmers stopped
production entirely. Donors and NGOs
have responded with years of subsidised
and free inputs to targeted farmers, but
sustainable access remains a challenge.

Hyperinflation and the subsequent
dollarization of the economy of 2009
wiped out the assets of many financial
institutions and their clients. The collapse
of the formal productive sectors of the
economy led to a growing informal sector
that in turn reduced demand for formal
financial services as poor, small-holder
farmers reverted to barter trade and
saving in physical assets. Furthermore,
in 2006, 70 percent of the economically
active population in Zimbabwe reported
they did not have access to formal
financial services.

SGs as a Platform to Improve Access to Agricultural Markets
In 1995, CARE Zimbabwe developed the
AGENT Project to improve the food and
income security of smallholder farmers
by increasing access to agricultural input
and output markets. The AGENT Project
aimed to develop sustainable linkages
between village-based suppliers of
agricultural inputs (agro-dealers), farmers
and other market actors. The Project
also offered training to new agro-dealers
to improve their ability to identify good
seed varieties. In addition to training in
business management (subjects such as
customer care, credit, stock management
and record keeping), they received
hands-on training in market surveying,
buying and stocking. In 1998, CARE
Zimbabwe launched the Internal Savings
and Lending (ISAL) project, using a
community-based SG approach for the
delivery of basic financial services. Then
in 2004, CARE Zimbabwe introduced
the AGENT Project to areas of the ISAL
programme while the ISAL methodology
was introduced to the farmer groups
established under the AGENT Project.

Value Added The ISAL structure provided CARE
Zimbabwe with an effective social
mobilisation tool to reach very poor
and remote communities organised
into largely cohesive ISAL groups. The
linkages with local agro-dealers have
enabled ISAL members to purchase
agro-inputs more effectively, including
at a lower cost, in greater quantities,
and of more appropriate seed varieties.
Importantly, the ISAL programme has
provided beneficiaries with the means to
make these essential purchases while
alleviating the need to sell productive
assets at the onset of each planting
season. In turn, some agro-dealers use
the ISAL groups as a marketing platform
and benefit from the groups’ improved
purchasing power.

However, the study found that most
linkages between ISAL groups and
agro-dealers were developed by ISAL
groups directly. A primary reason for of each meeting. In 2007, as the inflation rate reached the hundreds of millions,
even the cash-based groups began to
share-out in physical assets purchased
within moments of the periodic share-out.
This habit persists to 2010, when most
ISAL groups prefer to make periodic
distributions in physical assets rather
than cash.

The core element of the AGENT Project,
the agro-dealer, is the most demonstrably
sustainable. Prior to the most severe
portion of the economic crisis, the
wholesaling company working with the
agro-dealers continued to provide finance
for agricultural inputs to approximately
90 percent of the agro-dealers who were
trained by CARE. Business relationships
that were built between CARE and
remote rural retailers are beginning
to re-emerge and are demonstrating
impressive resilience. A strong factor
supporting this re-emergence is the
dual provision by wholesalers of both
grocery and agricultural inputs. For
agro-dealers, product diversification is
a sound business practice that enabled
them to survive when wholesalers pulled
out of agricultural input supply during the
economic meltdown.

Efficiency Gains, Leverage and Risks Economies of scale and scope have
been realised since CARE Zimbabwe’s
decision to enhance programme
integration. Efficiency gains were created
with respect to logistics and information
management because the ISAL and
AGENT projects benefited from the
social infrastructure established by each
other. However, the distribution of large
volumes of nearly free food aid and
agricultural inputs through agro-dealers competed with commercial shelf-space
and displaced the market orientation of
the agro-dealers.

Superimposing ISAL structures and
AGENT activities upon one another
carries the risk that the groups formed
for one purpose may lack the capacity
and social cohesion required for
additional activities. CARE recognises
these risks and emphasises the
importance of voluntary participation
in both projects; discussions with
dropouts revealed that long-standing
members of existing groups are
sometimes pressured to leave once an
activity is added for which they are not
suited, thus excluding individuals and
disrupting previously solid organisational
structures.

Lessons Learnt SGs serve as an invaluable safety
net for the members of other local
institutions, such as farmer groups,
by making available credit, grants and
periodic share-outs of cash and physical
assets to their common membership. In
turn, participation of ISAL members in
the AGENT model has provided access
to inputs at reduced costs and more
lucrative output marketing arrangements
that have improved their savings
capacity and the financial health of ISAL
groups in the community.

However, the direct linkage of ISAL
groups to the services of the AGENT
model appears to be weak, and there
is insufficient evidence to demonstrate
that the linkage improves access to and
participation in agricultural input and
output markets for the savings group
itself. While ISAL groups do sometimes
engage in joint productive activities,
they tend to be more consumptionoriented
and socially-focused. In fact,
ISAL groups in Zimbabwe were less
likely to purchase inputs in bulk from
agro-dealers as compared to gardening
groups and other community-based
organisations; they were more likely
to purchase consumer items such
as blankets and kitchenware. Thus,
perhaps crop-specific producer groups
are a more logical supply point for agrodealers
than SGs.

This brief is based on research and casestudy sponsored by the Aga KhanFoundation’s Savings Groups LearningInitiative, written by Ben Fowler andDavid Panetta in July 2010. View the full case study

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